Employer Specific Guides
Tesco Payslip: Why am I receiving 12.07% Holiday Pay?
If you work variable shifts, do overtime, or are on a flexible contract at Tesco, you might notice a strange addition to your payslip: an extra payment calculated at exactly 12.07% of your wages. This is "rolled-up" holiday pay, and it is entirely legal. Here is how it works.
For decades, holiday pay was simple: you took a week off, and your employer paid you for a standard 37-hour week. But what happens if you work 10 hours one week, and 45 hours the next? How much should you get paid when you take time off?
To solve this for part-time and flexible workers, major retailers like Tesco use the 12.07% Accrual Method.
Where does the 12.07% number come from?
It is not a random number made up by Tesco. It is a mathematical calculation based on UK employment law.
By law, every UK worker is entitled to 5.6 weeks of paid holiday per year. A standard working year is 52 weeks.
If you take away your 5.6 weeks of holiday from the 52 weeks, you are left with 46.4 working weeks.
If you divide 5.6 (holiday weeks) by 46.4 (working weeks), you get 0.12069... or 12.07%.
This means that for every hour you physically work on the shop floor, you accrue exactly 12.07% of an hour in paid holiday time.
Check Tesco's Calculations
If you think Tesco payroll has shortchanged you, you can use our Holiday Pay Calculator to verify exactly how much 12.07% of your gross earnings should be.
12.07% Holiday Pay Calculator →How Tesco Pays It (Rolled-up vs Accrued)
There are two ways Tesco can process this 12.07% calculation, depending on your exact contract type.
1. Rolled-up Holiday Pay (Paid immediately)
As of April 2024, the government officially legalized "rolled-up" holiday pay for irregular-hours workers. This means instead of Tesco holding onto your holiday money and paying it to you when you take a week off, they simply pay it to you immediately on every single payslip.
If you earn £300 in a week, Tesco adds a 12.07% bonus (£36.21) directly to that week's payslip. This means your take-home pay is artificially higher every week. However, when you actually take a week off work for a holiday, you will receive £0 in pay for that week, because Tesco has already paid you the holiday money in advance.
By law, rolled-up holiday pay must be clearly marked as a separate line item on your payslip. It cannot be secretly baked into your hourly rate.
2. Accrued Holiday Pot (Paid when you take leave)
If your contract doesn't allow rolled-up pay, Tesco will still calculate the 12.07% in the background, but they will hold the money in a virtual "pot". When you eventually book a week off in the system, Tesco dips into that pot to pay you your average weekly wage while you are sitting on the beach.
Does Overtime count towards the 12.07%?
Yes.
If you work a 16-hour contract, but you regularly pick up overtime and work 30 hours, Tesco must calculate your 12.07% holiday pay based on your total hours worked, including the overtime. You are entitled to holiday pay on all the money you earn, not just your contracted base hours. This is why you will often see a holiday pay adjustment on your payslip after a busy month of overtime.
Frequently Asked Questions
Is the 12.07% taxed?
Yes. Holiday pay is treated exactly the same as normal wages. The 12.07% addition will be subject to Income Tax and National Insurance deductions before it hits your bank account.
What happens if I leave Tesco?
If you are on an accrued scheme (where the money is held in a pot) and you resign, Tesco must pay out the remaining balance of your 12.07% pot in your final payslip. This is known as "pay in lieu of untaken holiday."
What if my payslip doesn't show the 12.07%?
If you are a full-time, salaried employee with fixed hours, you will not see this calculation. You simply get paid your normal monthly salary when you take time off. The 12.07% method is exclusively for workers whose hours vary.